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2010 | 2010(58(114)) | 1-20
Article title

Reserves in accounting

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The main aim of the article is to study the nature, scope and role of reserves in accounting.Reserves are seen as an accounting category comprising provisions for liabilities, capital reserves and valuation reserves. Provisions are intended to cover the debts the nature of which is clearly defined and which at the date of the balance sheet are either likely to be incurred, or certain to be incurred but uncertain as to amount or as to the date on which they will arise. Capital reserves, which are shown under Capital and reserves item in the balance sheet, include legal reserves, as well as reserves provided for in the articles of association and other reserves.Valuation reserves indicate the estimated difference between carrying amount and realizable value of assets.The main prerequisite of reserves is uncertainty accompanying all actions taken by an enterprise. By presenting the impact of risk on financial position of the company, reserves make it possible to comply with the true and fair view concept and to retain resources within the company to balance the estimated loss in value of net assets and therefore play a fundamental role in capital maintenance.
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